This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

History Shows this Market Has Even More Upside

By Salil Mehta, statistician

NEW YORK ( TheStreet) -- On July 22, the S&P 500 (e.g., the SPY ETF return as a proxy) closed at another record high, its 47th of the year.

We may find ourselves in the familiar territory of asking where the markets will go now, just as we may have asked after the 46 record closes that preceded it. Will we extend to another record close? Or will we retrench?

We can look for clues in similar periods, when investors and policy officials were asking similar questions.

The main reference for the government and central bankers is the period leading up to the Great Depression. That secular bull market ended in August 1929, just before most of the effects of the Great Depression, and it took 25 years for the market to recover, even longer in Europe, with World War II intervening.

While that duration of the global market recovery was lengthier versus today, the pronouncement of market choppiness and unsettled investor sentiment is exactly the same.

During that time, bouts of volatility were commonplace in multi-year increments, similar to what we have in recent years. And each bout in volatility led to a lower high and a lower low. And it continued over and over. Until it didn't.

Doesn't this sound similar to what we've had in this market recovery? Even more similar was the investor sentiment that reaching new highs in the financial markets was to be treated with even greater suspicion, as there was no global precedent for a faster recovery.

Let's look also at other periods of inflection in the S&P 500 history to gauge where we are.

These periods are not necessarily bull market peaks, but simply record-creating rallies where the underlying market sentiment was similar to what we have today, for example, 1964 or 1996.

We can examine a broad set of market statistics for these market periods in the history of the S&P 500 and compare data for about nearly a year's worth of trading data leading up to the event shown in the following table.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.60%
FB $117.44 -0.95%
GOOG $692.33 -0.84%
TSLA $232.12 -4.00%
YHOO $36.02 -1.40%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs